When hiring a new employee, many companies today ask that he or she sign an arbitration agreement. This agreement stipulates that the employee and the company submit to an arbitration process if the employee brings any legal action against the employer.
Many employers see this as a way to more quickly and cheaply resolve disputes because they can avoid going to court. However, recent studies have shown that this may not be the case – arbitration may not be any faster or cheaper than traditional litigation. One study found that arbitration cases were 30 percent more expensive and took 25 percent longer than going to court.
So, what alternatives to companies have if they want to contain the time and expense of litigation? Employment law attorneys have suggested a few alternatives.
1. Contractual Waiver of Jury Trials.
Employers can have employees sign agreements where the employee forgoes the right to jury trial if he or she brings any legal actions against the company. As long as the employee understands what he or she is doing, and takes the action voluntarily, courts have ruled that such prior written agreements are constitutional.
The written agreement itself must state clearly and precisely that with his signature, the employee is giving up all rights to have a legal claim connected to his or her employment considered by a jury.
2. Reducing time for statute of limitations.
Another option is to limit the amount of time that an employee has to make a legal claim against the company. Courts have upheld this procedure. Again, the employee would sign a prior written agreement consenting to a shorter window than the law allows to file a lawsuit or other claim.
The test case was an action taken by a Chrysler employee against the company. The employee had signed an agreement waiving the usual statute of limitations and agreeing to a shorter period in which he could file a lawsuit. Because he had signed the agreement, the shorter statute of limitations had expired, and as a result, he could not bring any action against the company, the court ruled.
But again, the terms of the agreement must be stated clearly and precisely, and the employee should know what he is signing and doing so voluntarily.
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